Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.
Few Frenchmen are more recognizable at home and abroad than the movie star Gerard Depardieu. Last week, Depardieu caused a great controversy in his native land by moving to Belgium – partly to avoid the 75 percent income tax on the wealthy that was introduced by the socialist President of France, Francois Hollande. Depardieu’s move was condemned by the French political establishment, including the Prime Minister Jean-Marc Ayrault who called the actor’s action “pathetic.”
Depardieu shot back and, in an open letter to Monsieur Ayrault, wrote, “I’m leaving because you think success, creation, talent and anything different should be punished. I am sending you back my passport and social security, which I have never used.” The French actor claims to have “paid 85 percent taxes on his revenues this year  and estimated that he had paid €145m ($189m) in total since he started work as a printer at the age of 14.”
A Laffer Curve Warning about the Economy and Tax Revenue for President Obama and other Class Warriors
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Being a thoughtful and kind person, I offered some advice last year to Barack Obama. I cited some powerful IRS data from the 1980s to demonstrate that there is not a simplistic linear relationship between tax rates and tax revenue.
In other words, just as a restaurant owner knows that a 20-percent increase in prices doesn’t translate into a 20-percent increase in revenue because of lost sales, politicians should understand that higher tax rates don’t mean an automatic and concomitant increase in tax revenue.
This is the infamous Laffer Curve, and it’s simply the common-sense recognition that you should include changes in taxable income in your calculations when trying to measure the impact of higher or lower tax rates on tax revenues.
No, it doesn’t mean lower tax rates “pay for themselves” or that higher tax rates lead to less revenue. That only happens in unusual circumstances. But it does mean that lawmakers should exercise some prudence and judgment when deciding tax policy.
Sometimes a single statement can say everything. Often these statements come as off-hand remarks, or in a setting where the speaker does not believe he or she will be recorded. A recent example from the 2008 campaign was Barack Obama’s infamous “bitter clingers” comment, which is still repeated today by his critics to depict him as elitist and disdainful towards many Americans. And now the 2012 race has its counterpart.
In comments recorded secretly from a private event, Mitt Romney laid out his assessment of 47% of America, and it’s a doozy:
There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax…[M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.
International Data on Living Standards Show that the United States Should Not Become More Like Europe
I’m not a big fan on international bureaucracies, particularly the Paris-based Organization for Economic Cooperation and Development. The OECD, funded by American tax dollars, has become infamous for its support of statist pro-Obama policies.
This weekend heralded the Opening Ceremonies of the thirtieth Olympiad of the modern era, kicking off the world’s greatest sporting spectacle as the best athletes in the world converge to see who will lay claim to the titles conveyed in the spirit of the Olympic motto, “Citius, Altius, Fortius” (“Higher, Faster, Stronger”). For the next two weeks, literally billions of people from all over the world will be cheering on their country’s athletes, urging them towards their ultimate goal of being draped with a gold medal. These athletes represent the finest in the world, those that have combined natural athletic talent with single-minded focus, grueling workouts, and year after year of tremendous energy expended in perfecting their craft. In the end that talent and hard work, sprinkled with a touch of luck and fate, will reveal who shall be crowned the athletic gods and goddesses of Mount Olympus.
As I watched the parade of athletes entering the Olympic stadium, my thoughts began to wander, as they often do, to the current polarization of the political climate, with one side (limited government conservatives and libertarians) who believe in minimal government interference and robust competition in a true free market), and the other side (liberal Democrats, socialists, and the Occupy Wall Street crowd) who believe in a heavy-handed government which uses force and coercion to right the perceived wrongs of the world.
In that context, I began to imagine what the Olympics would look like if our current president, whose actions could lead one to legitimately question whether he has mistaken himself for our emperor, were given complete omnipotence over the Olympic Games. So with that in mind, may I welcome you to the games of the first Obamalympiad:
Over the last few weeks, the Obama campaign and their friends in the main stream media have had a field day. First, going after Romney for having a Swiss bank account and several offshore accounts. This line of attack, has been followed by a relentless series of attacks over exactly when Mitt Romney left Bain Capital.
Both of these attacks were opportunities for Romney and his campaign team to turn the tables aggressively on Obama and on the media. At a time when unemployment remains over 8% and with our nation teetering on the verge of fiscal collapse, the Obama/media fascination with the minutiae of Mitt Romney’s background is an example of grotesque political slight of hand. It is the ultimate distraction from the issues that matter most.
Unfortunately, Mitt the timid and his camaign have - so far - failed miserably at fighting back.
On the issue of the offshore accounts, why didn’t Romney come forward and say “yes, I had accounts in Switzerland and the Cayman Islands, but guess what? There is absolutely nothing illegal about these accounts and, indeed, these accounts are the product of an overly complex and uncompetetive tax code that Obama and Democrats are hell bent on defending!”
On the issue of when he left Bain, why hasn’t Mitt and his campaign said “who cares!?” What if Romney was still at Bain after 1999? Does that suddenly change Obama’s failed record as President? Does that suddenly balance our budgets? Does it suddenly create jobs? Of course not. Why in God’s name is the Romney campaign taking the bait on these distractions?
If Mitt the timid thinks he can just run out the clock and win this election, he is sorely mistaken. The Obama campaign has shown how ruthlessly it will distort and distract, and Obama has the giant megaphone of the main stream media as his willing accomplice.
Mitt Romney will be the Republican nominee, unless he’s caught with a dead, Muslim, illegal immigrant boy. He will have the difficult task of facing Barack Obama in November. It is no secret that I have my differences with Governor Romney, however for the sake of wanting Barack Obama gone in November, I would like to offer him some free advice.
First thing you need to do Mitt is shut up about the sports team owners you know. We know you’re rich and successful in business, but the problem is, Obama is sending out his class warfare zombies in droves. They will use your success as their best weapon against you. Their goal is to paint you as out of touch with the American people. Also, along those lines, shut up about your dog and his road trip on the roof of your car.
Second piece of advice, be bold on the economy and fiscal policy. Be specific about your proposals and don’t be afraid to defend them. Don’t sugarcoat the fiscal problems we are facing. Propose bold tax reform including a flatter tax with a lot fewer deductions and credits. Eliminate a department or two. Propose real spending cuts and entitlement reform and more importantly, sell it. Outline a free market approach to healthcare as a replacement to Obamacare. Finally, start going after the Federal Reserve by supporting an audit of it.
Third, take a page from the Obama playbook. Set up a version of their “Fight the Smears” web page that they set up in 2008. Eventually Obama and his surrogates will drag the Mormon religion in this race and there needs to be something to address the nonsense they will be putting out.
Fourth, stay out of the social issues trap. The left will try to bring up abortion, gay marriage, birth control, and Lord knows what else to try and change the narrative. Yes, address the issues when they come up but don’t let the media trip up the message. The message needs to be about the economy and jobs first.
Following politics as closely as I do, I’ve built up a thick skin of cynicism regarding the presentation of truth by politicians and the media. There is a good reason for that; according to a Gallup poll a few months ago, from 1998-2010, the number of Americans expressing distrust of the mass media outlets has risen from 46% to 57%. Congressional approval ratings remain lower than the average age of a fan at a Justin Beiber concert. And while Americans generally want to think well of their president, (especially a president seen as proof that America is no longer a racist nation), Obama struggles to convince half of Americans he’s doing a good job.
I was thinking about this as I watched and read coverage of the Republican presidential candidates by the mainstream media. If we are to believe them, this assemblage of Republicans is among the most backward, bigoted, heartless and arrogant people ever to walk the earth. Mitt Romney is decried as being rich and out of touch with average Americans. Newt Gingrich is the arrogant, professorial philanderer too volatile to be trusted with the presidency. Rick Santorum is portrayed as the far right theocrat who will be sneaking into the homes of unsuspecting women and arresting them for using birth control. Ron Paul is, well, Ron Paul. They don’t know quite what to make of him.
As expected, President Barack Obama rolled out his budget proposal for FY 2013, which, as we noted yesterday, comes with a $1.33 trillion budget deficit. As you can imagine, there is a lot to parse through it the proposal, which has been all but declared dead-on-arrival in Congress.
Some of the budget proposals are familiar. President Obama is once again pushing tax hikes on individuals earning more than $250,000 — more than the millionaires and billionaires he so frequently targets. James Pethokoukis has a run down of the tax hikes in the budget:
Obama’s new budget isn’t about economic growth or cutting debt or creating a “built to last” economy. The Obama campaign is built around the idea of reducing inequality. So in his budget, Obama takes the populist whip to the wealthy and to business:
1. The top income rate would be raised to 39.6 percent vs. 35 percent today.
2. Under the “Buffett rule,” no household making over $1 million annually would pay less than 30 percent of their income in taxes.
3. Between now the end of a second Obama term, Obama proposes $707 billion in “net deficit reduction proposals.” Of that amount, only 16 percent is spending cuts.
4. The majority of small business profits would be taxed at 39.6 percent vs. 35 percent today.
5. The capital gains rate would rise to 25.0 percent (including the Obamacare surtax and deduction phase out) from 15 percent today.
6. The double-tax on corporate profits (including dividends) would increase to 64 percent based on the statutory corporate tax rate (58 percent using the effective tax rate), easily the highest among advanced economies.
On Tuesday night Barack Obama, America’s class warrior-in-chief, gave a rambling, divisive campaign speech thinly disguised as a State of the Union Address. It was short on facts and truth, but with a heaping helping of blame, obfuscation and denial of any responsibility he bears for the current mess in which the nation finds itself. This was an exercise in unadulterated narcissism, plain and simple, with very little reference to what makes America great. In this meandering diatribe, Obama used the word “I” an astounding forty-five times, “my” eighteen times, “fair share” four times, “millionaires” twice and “shared sacrifice” twice. By contrast, he used the word “freedom” once, “liberty” once, and “personal responsibility” exactly zero times. There were more than two dozen examples of Obama telling us what we should and shouldn’t do. It was all quite nauseating.
As a public service, I will once again break down the SOTU and correct the many errors and omissions contained therein. I can’t cover everything, but I’ll try to hit the high points.
“Think about the America within our reach: A country that leads the world in educating its people. An America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.”